Insurance consumer group slams govt

Insurance consumer group slams govt

Zakki P. Hakim, Jakarta

A consumer group slammed on Monday the Ministry of Finance for
its indecisiveness in dealing with 11 insurance companies in
difficulty, thus questioning its capability to exercise its
possible exclusive authority to declare insurance companies
bankrupt.

Indonesia Insurance Consumers Foundation (YLKAI) spokesman
Samladi Pekih said that based on Government Decree No. 73/1992 on
insurance business practice, the ministry already had the
authority to terminate the operation of a failed insurance
company.

However, he said, the ministry had apparently failed to act as
it had yet to decide the fate of 11 troubled insurance firms,
even though all of them had exceeded the suspension deadline
specified in the regulation.

The 11 companies are PT Asuransi Jiwa Pura Nusantara, Koperasi
Asuransi Jiwa Indonesia, PT Nabasa Life Insurance, PT Asuransi
Jiwa Namura Tata Life, Asuransi Jiwa Buana Putra, Asuransi Jiwa
Berkah Harda Sentosa, PT Asuransi Nugra Pacific, PT Asuransi
Sakarukma Sindukarta, PT Asuransi Inda Tamporok Life, PT Asuransi
Ganesha Danamas and PT Asuransi Securindo Adigama.

The firms were partially suspended by the government in 2002
and 2003 for failing to meet their obligations to policyholders.
Following the suspension, the firms were still allowed to operate
in order to address their problems.

Under Government Decree No. 63/1999, a partial suspension is
valid for 12 months at the most.

An article of the decree stipulates that should a troubled
insurance firm fail to solve the problems that have led to its
partial suspension, the ministry may terminate its operations.

"The 12-month deadline has passed for all 11 companies, but
the ministry has yet to terminate any of them," he said, while
claiming that the YLKAI represented policyholders of the 11
firms.

"Where is the government's resolute approach in this case?" he
asked, adding the 11 insurance firms' policyholders had suffered
due to the ministry's slow action.

He said that the policyholders were awaiting a decision on
whether or not they could get their money back.

Samladi thus cast doubts on the ministry's ability to exercise
its possible exclusive right to declare insurance firms bankrupt.
He gave as an example one of the 11 firms, Namura, which had been
declared bankrupt, not by the ministry but by a local court,
following a lawsuit filed by the policyholders.

There is an opinion that the ministry should be allowed to
become the single authority to declare unhealthy insurance firms
bankrupt. Such an opinion has been gaining ground recently,
following the case involving British-based insurance firm PT
Prudential Life Assurance, which was declared bankrupt by the
Jakarta Commercial court in April.

The idea was proposed on Monday by the Indonesian Advocates
Association (AAI), Indonesian Insurance Council (DAI) and the
Indonesian Association of Receivers (AKPI) during a hearing with
the House of Representatives on an amendment to the existing
bankruptcy law, which would allow courts to declare insurance
firms bankrupt.

"The House should be wise in deliberating the amendment,"
warned Samladi.

Should the House amend the law in accordance with the
proposal, there should be a clear-cut provision allowing the
public to take action against the minister of finance in the
event he or she fails to act against cheating insurance firms.

Separately, ministry insurance division director Firdaus
Jaelani told The Jakarta Post that his institution was indeed
delaying the termination of the 11 partially suspended firms as
it was still seeking a better solution.

"We are waiting for the right time to take action," Firdaus
said.

He said the ministry would revoke the companies' licenses at
an opportune time and call an extraordinary shareholders' meeting
to agree on the liquidation.

"If they refuse, we will declare them bankrupt," he said.